Gold prices recorded their sharpest monthly fall since 2013, dropping 12 per cent in March to USD 4,608 per ounce, according to the World Gold Council cited by Hindustan Times. The decline marked the weakest performance since June 2013, even as the metal remained in positive territory for the year overall.
The fall was seen across all major currencies, reflecting broad-based pressure on the precious metal during the month.
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Momentum factors drive the fall
The World Gold Council attributed much of the decline to momentum-driven factors. "Our monthly attribution model GRAM captured the sentiment - but not the magnitude - of the move, attributing much of the drop to momentum factors: global gold ETF outflows, a COMEX net long unwind and a price trend reversal," the World Gold Council stated.
A key factor was heavy outflows from global gold ETFs. "Global gold ETFs shed USD 12bn (84 tonnes) during the month, led almost entirely by North America with USD 14bn (-87t) and Europe with USD 0.1bn (-7t). Asia's USD 1.9bn (10t) inflows were a welcome positive, and highlight how dipbuying in Asia translated into much larger fund flow but lower equivalent tonnes," the report noted.
While rising real yields and a stronger dollar contributed to selling pressure, the report noted, "While real yields and the dollar undoubtedly contributed to net sales, other factors were also likely at play."
Retail and institutional selling intensifies
The report highlighted a build-up in retail exposure, which may have triggered a sell-off. COMEX Non-Reportable positions, linked to retail investors, saw an 18-tonne drop in the first three weeks of March. At the same time, Managed Money positions fell by 22 tonnes, indicating institutional activity.
A significant share of ETF selling was attributed to US investors, with around 80 tonnes exiting global funds between early March and March 24.
The Council also pointed to CTA-driven selling as a key amplifier. "CTA-driven selling likely amplified downside momentum. Estimated and anecdotally reported Commodity Trading Advisors (CTA) were very long heading into mid March. They reportedly unwound positions sharply when gold broke through its 50/55-day moving average on 16 March for the first time in seven months," it said.
Broader market pressures and outlook
Gold also faced pressure from wider market trends, including cross-asset deleveraging and rising bond yields. Central bank activity added to the pressure, with the report noting that "a decision by The Central Bank of the Republic of Turkiye (CBRT) to use approximately 50t of gold as collateral, predominantly via swaps, may have fuelled rumours of selling".
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"That this was liquidity driven and not a change in gold strategy is backed up by data at the US Fed suggesting increased outright selling of US Treasuries by central banks to buffer higher energy price risk was occurring in tandem," the report said.
Looking ahead, the Council noted early signs of stabilisation, with ETF flows turning positive in April and investors continuing to see gold as favourable over the medium term.
